http://www.sltrib.com/contentlist/ci_3700563
Cleaning up on Delta SkyMiles
Labor woes: The Delta subsidiary asked a judge for the OK to void its contract with its flight attendants
By Paul Beebe
The Salt Lake Tribune
SkyWest Inc., which bought one Delta Air Lines subsidiary last year, would be open to the possibility of buying the other subsidiary if it could design a suitable deal, SkyWest's chief financial officer said Tuesday.
Last month, Delta's top financial officer said his company might explore the possibility of a sale of its regional carrier Comair to help raise money if the subsidiary could be restructured. Comair and Delta filed for bankruptcy protection in September.
"We have no idea what Delta is thinking regarding Comair, although if it looks like there's a deal that fits with our corporate objectives we would be open-minded," SkyWest CFO Bradford Rich said after speaking at the Utah chapter of the Association for Corporate Growth's annual conference in Salt Lake City.
SkyWest bought Atlantic Southeast Airlines (ASA) on Sept. 7, a week before Delta sought protection from its creditors. The $425 million deal turned SkyWest into the largest regional airline in the country, with almost 400 aircraft and a coast-to-coast span with operations based in St. George and Atlanta.
During his speech, Rich said the ASA acquisition brought a lot of unfamiliar attention to SkyWest, which also owns SkyWest Airlines. In light of the airline industry's troubles, the deal attracted critics who questioned whether SkyWest, based in St. George, had the "corporate personality" to make the acquisition work, he said.
The outcome apparently isn't clear. Last week, SkyWest forecast first-quarter earnings in a range trailing Wall Street's average estimate of 62 cents a share. The company cited "atypical" factors, such as a smaller performance incentive payment for failing to meet certain operational objectives. SkyWest flies for Delta and United Airlines. It didn't identify which carrier will reduce its incentive payment.
"In a couple of years, we'll see if it was worthy of the attention," Rich said.
In a related matter, SkyWest on Tuesday began the public offering of 4 million shares of its common stock at a price of $26.05 a share. The sale, expected to end Monday, should raise $99.3 million. Rich said the proceeds will be used to repay $90 million that SkyWest borrowed to finance the ASA acquisition.
SkyWest initially announced the offering a week after the stock reached a record high $32.84 a share on Nov. 11. It pulled the sale when the stock began a decline that didn't end until mid-January, when it bottomed out at $26.02.
Comair operates 871 daily flights to 108 cities in the United States, Canada and the Bahamas. The company has labor problems similar to those that Delta has with its pilots, who have threatened to strike if their contract is rejected. Comair has asked a bankruptcy judge for permission to void its contract with its unionized flight attendants and impose $8.9 million in wage cuts.
Comair says it needs to reduce the wages and benefits of 970 flight attendants as part of a plan to cut $42 million in annual costs.
Without the cut, the carrier has said it will have to cease operations. U.S. Bankruptcy Court Judge Adlai Hardin could rule as soon as Saturday on Comair's motion.
In the dispute between Delta and its 6,000 pilots, an arbitration panel is expected to decide Saturday whether the company can force $305 million in annual pay reductions. Pilots have promised to walk off their jobs soon if that happens. No date has been set, but the chairman of the union's executive committee has been authorized to call a strike anytime after Monday.
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A look at Comair and SkyWest Inc.
Comair
Flies for: Delta Air Lines
Headquarters: Erlanger, Ky., across the Ohio River from Cincinnati
Founded: 1977. It became a subsidiary of Delta in 2000
Employees: 6,400
Flights: 871
Cities served: 108 in the United States, Canada and the Bahamas
Customers: 13.1 million in 2005
Fleet: 169 Bombardier CRJ regional jets
SkyWest Inc.*
Flies for: Delta, United Airlines
Headquarters: St. George
Subsidiaries: SkyWest Airlines (St. George), Atlantic Southeast Airlines (Atlanta)
Founded: 1972
Employees: 14,000
Flights: 1,981
Cities served: 264 in the United States, Canada, Mexico and the Caribbean
Customers: 28.6 million in 2005
Fleet: 179 Bombardier CRJ regional jets, 141 Canadair regional jets, 62 Embraer turboprops, 12 ATR turboprops
* SkyWest and ASA statistics are combined
Source: SkyWest, Comair
